Pakistan - Selling and buying

Reaching the consumers

Marketing opportunities

Consumer behavior:

The Pakistani consumer is very price sensitive and consumption levels of households generally come down with rise in prices. Although some Pakistani consumers are aware of quality differences and insist on world-class products, majority of the customers can sacrifice quality concerns for price reductions.

The quality of after-sales service plays an important role while making a purchase decision. To retain customer loyalty, companies are increasingly focusing on after-sales service.

In case of durable and non-consumer items, many consumers prefer to have a complete turnkey package which includes installation, operational training, and onsite guarantee.

Consumer profile:

Pakistani consumers are now becoming more and more brand conscious. This trend is generating demand for some products that were previously unfamiliar, particularly in sectors like apparel and household consumer durable items.

Moreover, improvement in country’s economy has resulted into an increase in purchasing power and an expansion of the middle class.

However one should know that there is a small section of the country population (less than 5%) which belongs to elite section of the society; consisting mainly of landlords, politicians, and government officials. They are the biggest consumers of luxury goods imported into the country.

Distribution network

Evolution of the sector: The retail sector in Pakistan is at its nascent stage. The sector is still very much underdeveloped and fragmented. The situation is reflected by the fact that a large number of small retail outlets exist in the country (estimated at 2.5 million), and most of these outlets sell merchandise of daily use.

There are also hundreds of government-owned Utility Stores across the country selling food and household items. These stores are generally used by poor sections of the population and help the governmental to fight inflation.

However the concept of organized retailing has now started catching up in the country, with a couple of foreign large retailers showing interest in this market.

There is not yet any chain of stores in Pakistan, though the situation may change soon. Quite recently the concept of garment chain stores was introduced, whereby many such chains have started selling locally manufactured garments mainly in the large cities like Karachi and Lahore.

The segment of wholesale distribution is quite well-developed in Pakistan. It consists of around 1,000 - 1,500 wholesalers. Karachi is the main hub for wholesale distribution of goods.

Moreover there are a dozen shopping malls in the country, mainly located in Karachi and Lahore.

Non tariff barriers: According to the Trade Policy-2006 of Pakistan, the import of 30 items is banned into the country. This ban is based on religious, environmental, security, and health issues.

Moreover the government reserves the power to grant sector-specific duty exemptions, concessions, and protections under Statutory Regulatory Orders (SROs), though the use of SROs has decreased during recent years.

Average Customs Duty (excluding agricultural products): Customs duties in Pakistan are levied on ad-valorem basis. The maximum customs duty is 25%. In addition to the customs duty, the government charges 15% sales tax on the duty paid value of a variety of goods imported into the country. Customs duty and other charges are payable in rupees. For more details, visit: Pakistan Customs

Organizing goods transport

Organizing goods transport to and from: By rail: Pakistan Railways provides an important mode of transportation to the farthest corners of the country, catering to the large-scale movement of both freight and people. The railway network in Pakistan extends over 12,634 km.

By Road: The road transport network in Pakistan is relatively outdated (built before 1947 during the British Raj), although new motorways are now being constructed. However it is relatively easy to transport goods by road from one place to another within the country.

By sea: The port of Karachi is the most important and the busiest port in the country. It is administered by Karachi Port Trust (KPT). Other ports include ports of Qasima and that of Gwadar. The Pakistani ports have a strategic location in connecting Central Asian countries and the Gulf countries.

By air: Only those foreign air transport companies which have signed an agreement with Pakistani authorities are authorized to work with or in Pakistan. The Pakistani airports belong to the public sector. The airports of Karachi, Lahore and Islamabad have considerable international activity.